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“It’s like Thailand was 50 years ago,” Alexandre de Lesseps told
me. We were talking about the next big emerging market to bloom
in Asia. It may surprise you, but it is one heck of a story… and
opportunity. It also fits our grand thesis on emerging markets
and is the subject of my upcoming book, World Right Side
Up. The country I’m talking about is Myanmar (or Burma, as
most people still seem to call it).

I caught up with Alex over the holidays because I remembered his
infectious enthusiasm for the country. He is an accomplished
investor of frontier markets, those half-forgotten realms on the
fringe of the investing world. Alex has been investing in Burma
for 15 years as a partner at SPA Capital Partners, working with
Serge Pun & Associates. The latter is an investment holding
company that has been in Burma since ’91. (And yes, Alex is the
great-great-grandson of Ferdinand de Lesseps, the French
developer of the Suez Canal, who also oversaw the early
construction of the Panama Canal.)

I first met Alex at a dinner at a pleasant riverside restaurant
in Phnom Penh, Cambodia. My friend Doug Clayton of Leopard
Capital arranged the dinner. (We’ll hear from Doug in a bit.) I
was in the middle of a swing through Thailand, Cambodia and
Vietnam. When I asked investors in these places what the next big
story to emerge from Southeast Asia would be, the answer was
always the same: Burma.

Burma is beginning, at last, to thaw. The grip of the military
junta is loosening, by its own hand. (“This is very important,”
Alex said. “The decision to change the country came from within.
It speaks to the depth and substance of the changes taking
place.”) The market is beginning to open up. Political prisoners
have been released. Press censorship rules have been relaxed.
Things are
happening quickly. Even Hillary
Clinton visited late last year, the first US Secretary of
State to do so in 50 years.

Alex told me he’s never seen anything like it in all his years in
Burma. The hotels are full. Many are already sold-out for the
first few months of the year. And Burma gets more and more
mainstream attention nearly every week. Why is Burma important?

In short, it has everything the world craves — in size. The
Wall
Street Journal reported: “Myanmar’s potential is too
great for some investors to ignore. One of the last, large
frontier markets in Asia, it is rich in oil, gas, timber and gems
and has the potential to be a major rice and seafood exporter.”
Estimates of natural gas reserves, for instance, would make
Burmese fields the 10th largest in the world. Labor costs are
low, which could support basic manufacturing.

Doug Clayton visited Rangoon (Yangon) and wrote about it in his
newsletter (it is available free at www.leopardasia.com — well
worth the visit). Doug notes that Burma has the largest landmass
in mainland Southeast Asia and big fertile river deltas. It has
1,240 miles of uninterrupted coastline, deep-water port sites on
the strategic Indian Ocean, plus 600 little-used tropical
islands.

As home to more than 2,000 pagodas and temples and miles of
pristine beaches, Burma could support a larger tourism business.
“From my own wanderings in both countries,” Doug concludes, “I
would rate Myanmar’s long-term tourism potential just as strong
as Thailand’s — which draws 14 million tourists a year, versus
Myanmar’s 300,000.”

The comparison with Thailand is hard to miss, and Doug pursues it
further. “To comprehend Myanmar’s potential, look over the border
at Thailand, a country of comparable size and population,” Doug
continues. “Around the time of World War II, colonial Burma’s
economy and development surpassed Thailand’s.” Since then,
though, Thailand’s economy is now 10 times bigger than Myanmar’s.
Doug reckons that “the gap between these historical peers seems
likely to narrow as Myanmar introduces a political system more
similar to Thailand’s.”

This is essentially the motive force behind the “world right side
up” idea — this narrowing of historically anomalous large gaps in
development to a world more in tune with longer historical
experience (and hence, right side up).

One of the books I read over the holidays was Thant Myint-U’s
Where China
Meets India: Burma and the New Crossroads of Asia. Thant
continues the theme. Rangoon was once the rich capital of British
Burma. It was an exporter of rice, timber and oil. “By the late
1920s,” Thant writes, “Rangoon exceeded New York as the greatest
immigrant port in the world… Rangoon became a hub for all of
Asia.” By the 1930s, Burma’s economy, on a per capita basis, was
at least twice that of China’s. Today, China’s is about six times
as great. That is a gap that ought to narrow as Burma opens up.

Simple geography also anchors Burma’s importance. It sits between
China and India like a hinge. It is a big country, the size of
France, with 60 million people. Thant makes Burma’s unique
position clear. If you draw a 700-mile radius around Mandalay,
Burma’s second-largest city, you encompass a population of 700
million people — nearly one in 10 of all the people on the
planet.

It is a natural crossroads. Already, work has begun on a network
of pipelines and highways and railways — all with Burma as the
bridge to the two potentially biggest markets on earth, China and
India.

“There will be opportunities to invest,” Alex told me. Indeed,
he’s already seeing investors line up. In the next several
months, new funds will launch. The Tokyo Stock Exchange announced
it would help Myanmar develop its stock market. Many companies
are already trying to elbow their way in Burma. These are mostly
Asian companies, as they are not covered by the sanctions imposed
by the US and Europe. But some Western companies are already
making inroads. Unilever sells soap and soup. Caterpillar,
too, has a business there. And a few are still there as
exceptions to the sanctions, such as the French oil giant Total.

Overwhelmingly, the foreign investment has focused on oil and
gas, mining and power. And Burma’s biggest investor has been
China. (One Chinese businessman quoted in Thant’s book says, “I
hope the sanctions last forever.” And why not? It keeps out the
competition.) There is plenty of opportunity in basic things like
cement and automobiles and hotels.

And it’s all just beginning. We’ll keep an eye on Burma as
opportunities open up. It’s an exciting time to be an investor as
the world turns right side up.